In business, contracts are often a necessity. These legal documents govern the rights and obligations of each party to an agreement. A well-drafted contract also provides an avenue for recovery in the event that one party breaches, or violates, the contract.
A breach of contract may occur any time that a party to the contract does not fulfill its obligations. This may happen in a number of different ways, from failing to provide goods and services, providing the wrong goods and services, or not paying in a timely manner. Depending on the facts of the situation, you may be able to pursue litigation to recover any losses that you suffered as a result of the breach.
Forbes & Forbes Law advises businesses in all aspects of contract law, from formation and drafting to contract disputes in El Paso, TX. We offer practical advice that incorporates both legal analysis and financial realities. To learn more about how we can help your company, give us a call to schedule a consultation with a member of our team.
What Is a Breach of Contract?
In its simplest terms, a breach of contract is a violation of one or more terms of a contract. A breach of contract can take many forms, including a partial breach of contract, an anticipatory breach of contract, a material breach of contract, or a specific performance breach of contract.
To prove that another party breached a contract, you will first need to show that a valid contract existed. In most cases – particularly in business disputes – the contract will be written. However, it is also possible to have an oral contract, as long as it contains the essential elements of a contract.
A valid contract typically requires three things:
- An offer;
- Acceptance of the offer; and
- Consideration (something of value given in exchange for goods and services).
Importantly, the parties must also have an intention to enter into an agreement with each other to prove the existence of a contract. This may also be referred to as “meeting of the minds.” An agreement is often proved by introducing the written document itself.
Consideration is a necessary element of any contract. If one party promises to provide something (such as goods or services) without getting anything in return, then they are giving a gift rather than doing something pursuant to a contract. A gift cannot be enforced in court in the same way that a contract can.
If you can demonstrate that a contract existed, you can then move onto the next step: showing that the contract has been breached (violated) in some way. Finally, you will need to demonstrate that you suffered actual losses or damages as a result of the breach. If the other party breached your contract, but you didn’t suffer any damages, then a lawsuit for breach of contract will likely fail.
Examples of a Breach of Contract
A breach of contract can happen in any number of ways, including:
- Failure to complete a job;
- Failure to pay on time;
- Provision of subpar goods or services; and/or
- Violation of a non-compete clause.
If another party to a contract violates it in some way, you may be able to negotiate a satisfactory resolution. However, in some situations, litigation may be the best option to recover damages or to obtain performance under the contract. The best remedy will depend on the unique facts of your case.
For example, you own a company that requires certain services – such as maintenance and cleaning. You have a contract with a business that cleans your worksite several times a week. For the past several weeks, its employees have not shown up to clean – and so trash is piling up and the common areas of your office are dirty.
After calling the business owner, you learn that they have had a number of people out sick and/or quarantined because of COVID-19. They promise to send someone as soon as possible, and then to resume the normal cleaning schedule. They also offer you a discounted rate to make up for the missed dates.
In this situation, negotiating directly with the other party to the contract is probably the best result for your business. Although the cleaning company should have given you a call when they knew that they were short-staffed, they immediately offered a solution and tried to make it right.
However, litigation may make sense for other breaches of contract. Consider a situation where an equipment rental company provided supplies to a construction company for a trenching project. The construction company paid the first installment under the contract, and then failed to make any further payments or to return the equipment. All attempts to contact the owner have failed. Here, pursuing litigation or commercial collections may be the best choice to recover both the equipment and any outstanding rental fees.
In some cases, a breach of contract is so minor that you likely cannot pursue litigation. For example, a vendor sent your company a shipment of new computers, but provided the wrong instruction manuals for the computers. Immediately after you inform them of the error, the vendor sends the correct manuals. Because your business likely did not suffer any losses due to this error, litigation is probably not feasible.
There may be cases where a late delivery of goods or services – or delivery of the wrong goods or services – could give rise to litigation. If the delay caused a financial loss (such as causing you to breach a separate contract with a different company), then you may be able to file a claim against the other party.
Other examples of breach of contract may include:
- A company informs you that it will not be able to provide the goods that it agreed to provide, in advance of a violation (anticipatory breach of contract);
- A former employee leaves and immediately goes to work for a competitor, in violation of a non-compete clause in their employment contract;
- A buyer misrepresented the assets being used as collateral in a purchase agreement;
- A company only ships some of the goods required (partial breach of contract); or
- A business fails to perform the services required under the contract (material breach of contract).
In each situation, a consultation with an El Paso business attorney may be a valuable way to understand your legal rights and options for pursuing a claim.
Experienced Legal Counsel for El Paso Businesses
Contacts are an essential part of any business’ operations. If another party breaches a contract with your company, you may be able to informally negotiate a resolution – or you may even need to take them to court to enforce your rights under the contract.
Based in El Paso, Forbes & Forbes represents companies of all sizes on a range of business matters, including contract disputes. We offer skilled legal representation that will help your company thrive. To learn more or to schedule a consultation with an El Paso contract dispute attorney, contact our law office at 915-533-5441 or fill out our online contact form.